The Monetary Policy Committee (MPC), headed by Reserve Bank Governor Shaktikant Das, will announce its policy decision tomorrow, October 8, at the end of a three-day two-month review meeting. The monetary policy group is widely expected to maintain the status quo on the repo rate to support growth, but some analysts see a slim chance of a token increase in the reverse repo rate.
Market participants will keep an eye on the Reserve Bank’s guidance on cash withdrawal, as surplus money in the banking system has recently crossed Rs 10 lakh crore. Many also expect the bank regulator to announce additional bond purchases; The Reserve Bank has already bought bonds worth Rs 2.05 trillion this fiscal as part of the government’s bond acquisition program.
All 60 forecasters in the Reuters poll said there was no change in the repo rate on the upcoming policy. They expect the RBI to raise the repo rate only in April-June 2022, despite rising price pressures due to rising fuel prices.
At its last two-month Monetary Policy Committee (MPC) review meeting in August, the Reserve Bank maintained key interest rates for the seventh consecutive time and maintained a GDP growth target of 9.5 percent. It kept the repo rate unchanged at 4 percent and the reverse repo rate at 3.35 percent.
After cutting 115 basis points (PPS) at the beginning of 2020, the Reserve Bank recorded a repo rate of 4% from May 2020. It last cut policy rates on May 22, 2020. To stabilize the economy from the impact of the corona virus.
Reserve Bank Governor Shaktikant Das on Wednesday said India should seek sustainable growth through medium-term investments and sustainable financial and structural reforms after the end of the global epidemic.
Meanwhile, India’s service sector expanded for the second month in a row in September, pushing companies to hire more staff for the first time in almost a year, with improved domestic demand and the easing of Govt-19 restrictions. The IHS Market Services Purchasing Managers’ Index fell to 55.2 in September from an August 18 high of 56.7 in September, but was more than 50 comfortable separating growth from the contraction.
Moody’s has also raised India’s rating outlook from its previous “negative” outlook to “stable”. The global rating agency said the economic recovery was in progress as operations gradually grew and spread across sectors. Moody’s downgraded India from Baa2 to Baa3 last year, noting that it may face difficulties in implementing policies to mitigate the long-term risks of low growth.